Arambagh Co-op Agricultural Marketing Society Ltd., Kolkata V. ACIT, CIR-I, Hooghly

ITA 804/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9254 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 01-05-2014
• Court: TRIBUNAL
• Department Lawyers: R S BISWAS CIT LD
• Assessee Lawyers: H V BHARADWAJ ACA LD
• Keywords: Reasonable cause

Judgement Text

ITA NOS. 804 & 805/KOL/14-A-JM M/S. ARAMBAGH CO-OP AGRL. MKTG. SOCIETY LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, KOLKATA BEFORE : SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A NO. 804/KOL/2014 A.Y : 2008-09 AND I.T.A NO. 805/KOL/2014 A.Y : 2009-10 ARAMBAGH CO-OP AGRICULTURAL MARKETING SOCIETY LTD PAN: AABAA0801B .APPELLANT VS. ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-1, HOOGHLY,AYAKAR BHAVAN, KHADINAMORE, P.O. CHINSURAH, DIST-HOOGLY, WEST BENGAL-712101 ..RESPONDENT FOR THE APPELLANT/ASSESSEE : SHRI . H. V.BHARADWAJ, ACA, LD. AR FOR THE RESPONDENT/DEPARTMENT: SHRI.R.S.BISWAS, C IT, LD. DR DATE OF HEARING : 08-02-20 17 DATE OF PRONOUNCEMENT : 28-02-2017 ORDER SHRI S.S VISWANETHRA RAVI, JM THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE SEPARATE ORDERS BOTH DATED 12-3-2014 PASSED BY CIT(A)-XXXVI, KOLKATA FOR THE A.YS 2008-09 AND 2009-10, WHEREBY HE CONFIRMED THE PENAL TY OF RS. 1,00,000/- EACH IMPOSED BY THE ASSESSING OFFICER U/S. 271B OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). ITA NOS. 804 & 805/KOL/14-A-JM M/S. ARAMBAGH CO-OP AGRL. MKTG. SOCIETY LTD 2 2. THE ONLY GROUND THAT IS TO BE DECIDED IS AS TO W HETHER THE LD. CIT-A CORRECT IN CONFIRMING THE PENALTY IMPOSED BY THE AO U/S 271B OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. SINCE THE ASSESSEE AND THE ISSUE RAISED THEREIN ARE COMMON AND IDENTICAL, BOTH THE APPEALS CLUBBED AND HEARD TOGE THER AND DISPOSED OF THE SAME BY THIS COMMON ORDER FOR THE SAKE OF CONVE NIENCE. THEREFORE, THE COMMON FACTS AS ARRAYED IN ITA 804/KOL/2014 ARE DISCUSSED HEREIN UNDER FOR THE SAME. 4. THE ASSESSEE IS A CO-OPERATIVE SOCIETY. THE TAX AUDIT REPORT AS REQUIRED BY THE PROVISIONS OF SECTION 44AB OF THE A CT WAS FILED BY IT ALONG WITH ITS RETURN OF INCOME FOR THE YEAR UNDER CONSID ERATION ON 14-09-2009 AS AGAINST THE SPECIFIED DATE OF 30-09-2008. THE AS SESSING OFFICER, THEREFORE, INITIATED PENALTY PROCEEDINGS UNDER SECT ION 271B OF THE ACT. IN REPLY TO THE SHOW-CAUSE NOTICE ISSUED DURING THE CO URSE OF SAID PROCEEDINGS, IT WAS EXPLAINED THAT THE ASSESSEE WAS IGNORANT ABOUT INCOME TAX LAW AND RULES THEREWITH AND NOT AWARE TH AT PENALTY WOULD BE ATTRACTED FOR NON-SUBMISSION OF TAR [TAX AUDIT REPO RT] AND URGED TO DROP THE PENALTY PROCEEDINGS INITIATED U/S. 271B OF THE ACT. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESS ING OFFICER. THE A.O HELD THAT THE ASSESSEE-SOCIETY COULD HAVE APPOINTED THE TAX AUDITOR AND COULD HAVE GOT THE TAX AUDIT DONE INDEPENDENTLY MUC H BEFORE THE SPECIFIED DATE 30-09-2008 AND THE DELAY IN APPOINTM ENT OF STATUTORY AUDITORS UNDER THE COOPERATIVE ACT HAD NO RELEVANC E WITH INCOME TAX LAW. HE REJECTED THE EXPLANATION OF THE ASSESSEE ON ITS FAILURE TO OBTAIN AND FURNISH THE TAX AUDIT REPORT BY THE SPECIFIED D ATE. HE, THEREFORE, PROCEEDED TO IMPOSE THE PENALTY OF RS.1,00,000/- U/ S. 271B OF THE ACT. ITA NOS. 804 & 805/KOL/14-A-JM M/S. ARAMBAGH CO-OP AGRL. MKTG. SOCIETY LTD 3 5. THE PENALTY IMPOSED BY THE ASSESSING OFFICER UND ER SECTION 271B OF THE ACT WAS CHALLENGED BY THE ASSESSEE IN THE APPEA L BEFORE THE CIT(A). THE ASSESSEE CONTENDED THAT THE STATUTORY AUDITORS WERE APPOINTED BY THE COOPERATIVE DEPARTMENT OF GOVT. OF WEST BENGAL TO C ONDUCT STATUTORY AUDIT AND COULD COMPLETE THEIR AUDIT ONLY ON 19-08- 2008. IT WAS SUBMITTED THAT THE ASSESSEE-SOCIETY THEREAFTER APPOINTED TAX AUDITOR, WHO IN TURN SUBMITTED HIS AUDIT REPORT ON 31-07-2009, WHICH WAS FILED ON 14-09-2009 ALONG WITH THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. IT WAS CONTENDED THAT THERE WAS SUFFICIENT CAUSE FOR THE D ELAY IN FILING THE TAX AUDIT REPORT BEFORE THE SPECIFIED DATE ON 30-09-200 8 AND FAILURE TO FURNISH THE SAME WITHIN THE DUE DATE IS NOT INTENT IONAL AND WAS BEYOND ITS CONTROL. THE CIT(A), HOWEVER, DID NOT FIND MERIT IN THE SAME AND PROCEEDED TO CONFIRM THE PENALTY IMPOSED BY THE ASS ESSING OFFICER FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH 3.4 OF HIS IMP UGNED ORDER:- 3.4. IN THE PRESENT CASE THE APPELLANT HAS NOT BEE N ABLE TO PROVE THAT THERE WAS A REASONABLE CAUSE FOR FAILURE. THE EXPLANATION OFFERED IS NOT A CCEPTABLE. IN VIEW OF THE ABOVE AND TAKING INTO CONSIDERATION THE COURT DECISION AS CITED ABOV E, IT IS HELD THAT THE A.O, HAD CORRECTLY IMPOSED THE PENALTY. 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. THE LD.AR RELIED O N THE ORDER DT: 03-06- 2016 OF C BENCH, KOLKATA TRIBUNAL IN ITA NO. 2396 /KOL/2013 IN THE CASE OF SINGUR THANA LARGE SIZED PRIMARY AGRICULTURE CO-OP MARKETING SOCIETY LTD FOR AY 2009-10 AND SUBMITTED THAT UNDER SIMILAR CI RCUMSTANCES THE PENALTY LEVIED U/S. 271B WAS DELETED BY THE I.T.A.T . HE REITERATED THE ARGUMENTS TAKEN BEFORE THE LD. CIT(A). 7. THE LD. DR SUBMITTED THAT DURING THE COURSE OF H EARING THE AR OF THE ASSESSEE WAS ASKED TO PRODUCE ALL CORRESPONDENC E MADE BY THE ASSESSEE WITH THE CO-OPERATIVE DEPARTMENT TO ENSUR E THAT THE AUDIT IS DONE WITHIN THE SPECIFIED DATE. HOWEVER, THE AR HAS BEEN UNABLE TO ITA NOS. 804 & 805/KOL/14-A-JM M/S. ARAMBAGH CO-OP AGRL. MKTG. SOCIETY LTD 4 PROVIDE ANY CORRESPONDENCE OR OTHER EVIDENCE TO SHO W THAT ANY EFFORT WAS MADE BY THE ASSESSEE TO ENSURE THAT THE CO-OPERATIV E DEPTT. APPOINTS AUDITORS IN TIME AND THAT THE AUDIT WAS DONE BY THE SPECIFIED DATE. 8. WE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATER IAL AVAILABLE ON RECORD. AS RIGHTLY POINTED OUT BY THE LD. AR THAT T HIS TRIBUNAL DECIDED THE IDENTICAL ISSUE BY HOLDING THAT THE DELAY CAUSED IN OBTAINING AND FILING THE AUDIT REPORT WAS BEYOND THE CONTROL OF ASSESSEE. TH E RELEVANT PORTION PARA NO-4 OF SAID ORDER DATED 03-06-2016 IN THE CASE OF SUPRA IS REPRODUCED HEREIN BELOW FOR USEFUL READING: 4. WE HAVE HEARD BOTH THE SIDES AND ALSO PERUSED TH E RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE AUTH ORITIES BELOW AS WELL AS BEFORE US, ITS FAILURE TO OBTAIN AND FURNISH THE TAX AUDIT REPORT BY THE S PECIFIED DATE OF 30.09.2009 AS PER THE REQUIREMENT OF SECTION 44AB WAS DUE TO DELAY IN COM PLETION OF STATUTORY AUDIT BY THE AUDITORS APPOINTED BY THE COOPERATIVE DEPARTMENT. SINCE THE STATUTORY AUDITOR UNDER THE COOPERATIVE ACT WAS TO BE APPOINTED BY THE COOPERATIVE DEPARTMENT A ND SUCH APPOINTMENT AS WELL AS CONDUCT AND COMPLETION OF AUDIT BY THE STATUTORY AUDITOR WA S BEYOND THE CONTROL OF THE ASSESSEE, WE FIND MERIT IN THE CONTENTION OF THE ID. COUNSEL OF THE A SSESSEE THAT THE DELAY IN COMPLETION OF STATUTORY AUDIT, WHICH CAUSED THE FAILURE OF THE ASSESSEE TO OBTAIN AND FURNISH THE TAX AUDIT REPORT UNDER SECTION 4AB, WAS DUE TO THE REASONS BEYOND THE CON TROL OF THE ASSESSEE AND THE SAME CONSTITUTED THE SUFFICIENT CAUSE FOR ITS FAILURE TO COMPLY WITH THE REQUIREMENT OF SECTION 44AB. MOREOVER, THE TAX AUDIT REPORT OBTAINING BELATEDLY WAS FILED BY THE ASSESSEE ALONG WITH ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 05.01 .2010 AND THE SAME, THEREFORE, WAS AVAILABLE TO THE ASSESSING OFFICER WHILE MAKING THE ASSESSMEN T OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THE DEFAULT ON THE PART OF THE ASSES SEE IN OBTAINING AND FURNISHING THE TAX AUDIT REPORT BY THE SPECIFIED DATE THUS WAS TECHNICAL OR VENIAL IN NATURE. HAVING REGARD TO ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT IT IS NOT A FIT CASE TO IMPOSE PENALTY UNDER SECTION 271B AND CANCELLING THE PENALTY SO IM POSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS), WE ALLOW THIS APPEAL OF TH E ASSESSEE. 9. IN THE PRESENT CASE ALSO THE ASSESSEE COULD NOT OBTAIN AND FILE THE TAX AUDIT REPORT AS REQUIRED U/S. 44AB OF THE ACT D UE TO DELAY IN APPOINTMENT OF AUDITORS BY THE CO-OPERATIVE DEPARTM ENT FOR STATUTORY AUDIT. THIS APPOINTMENT IS NOT IN THE CONTROL OF TH E ASSESSEE. IT IS ONLY THEN AFTER THAT THE ASSESSEE APPOINTS TAX AUDITOR. THE ASSESSEE FILED THE TAX AUDIT REPORT IMMEDIATELY AFTER OBTAINING THE SA ME FROM ITS TAX AUDITOR IN FORM NO.3CA ON 14-09-2009. WE FIND THAT THE ISS UE ON HAND IS SIMILAR TO THAT CASE DECIDED BY ORDER DATED 03-06-2016 BY THE COORDINATE BENCH OF THIS TRIBUNAL PASSED IN ITA NO.2396/KOL/2013 IN THE CASE OF SUPRA. FOLLOWING THE SAME, WE ARE OF THE VIEW THAT IT IS N OT A FIT CASE TO IMPOSE ITA NOS. 804 & 805/KOL/14-A-JM M/S. ARAMBAGH CO-OP AGRL. MKTG. SOCIETY LTD 5 THE PENALTY OF RS.1,00,000/- U/S. 271B OF THE ACT. THEREFORE, WE CANCEL THE PENALTY IMPOSED BY THE AO AND CONFIRMED BY THE CIT(A). THEREFORE, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 10. NOW, COMING TO OTHER APPEAL FILED FOR AY 2009-10 IN ITA 805/KOL/ 2014, AS DISCUSSED ABOVE, THE FACTS ARE ADMITTEDLY UNDISP UTED EXCEPT THE DATES IN RESPECT OF OBTAINING STATUTORY AUDIT REPORT ETC IN THIS YEAR THE STATUTORY AUDITORS APPOINTED BY THE GOVERN MENT RENDERED THEIR REPORT TO THE ASSESSEE ON 18-08-2009 AND THE TAX AU DITOR AS APPOINTED BY THE ASSESSEE GIVE THEIR REPORT ON 04-11-2009. IM MEDIATELY, THEREAFTER, ALONG WITH THE SAME, THE ASSESSEE FILED ITS RETURN ON 25-11-2009, THEREFORE, THERE IS A DELAY OF 46 DAYS IN FILING TH E TAR FROM THE DATE SPECIFIED U/SEC 44AB OF THE ACT. SINCE, WE EXPRESSED OUR OPINION IN A SIMILAR ISSUE IN THE AFOREMENTIONED PARAS THAT THE DELAY CAUSED IN OBTAINING AND FILING THE AUDIT REPORT WAS BEYOND TH E CONTROL OF ASSESSEE, BY FOLLOWING THE SAME, WE CANCEL THE PENALTY IMPOSE D BY THE AO U/SEC 271B OF THE ACT AND AS CONFIRMED BY THE CIT-A FOR T HE A.Y 2009-10. ACCORDINGLY, GROUND RAISED INVOLVING THE SAME IS AL LOWED 11. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN ITA 804/KOL/ 2014 FOR AY 2008-09 AND ITA 805/KOL/2014 FOR AY 2009-10 ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28-02-2017 DATE: 28-02-2017 SD/ - J.SUDHAKAR REDDY ACCOUNTANT MEMBER SD/ - S.S. VISWANETHRA RAVI J JUDICIAL MEMBER ITA NOS. 804 & 805/KOL/14-A-JM M/S. ARAMBAGH CO-OP AGRL. MKTG. SOCIETY LTD 6 COPY OF THE ORDER FORWARDED TO:- 1. ARAMBAGH CO-OP AGRICULTURAL MARKETING SOCIETY LTD C/O V.N PUROHIT & CO. CHARTERED ACCOUNTANTS, UNIT-III, 4 TH FLOOR, SUIT NO.4G, 4 CHOWRINGHEE LANE, KOLKATA-700016. .. APPELLANT 2. A.C.I.T CIRCLE-1, AYAKAR BHAVAN, KHADINAMORE, P.O. CHINSURAH , DIST-HOOGLY, WEST BENGAL-712101.. RESPONDENT 3. CIT-A-XXXVI, KOLKATA 4. CIT,KOLKATA 5. DR 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE AUTHORITY, KOLKATA BENCHES, KOLKATA